Increase in gold prices has given a fresh opportunity to the investors to invest their money in the new emerging asset.

1. Economics Assignment
Increase in gold prices has given a
fresh opportunity to the investors
to invest their money in the new
emerging asset.
By Anushree Mazumdar

2. Gold in various forms in which you can invest
If you are a staunch believer
in owning gold in its physical
form, invest in gold coins or
gold bars. If you are saving
for an upcoming marriage in
the family, do not buy
jewellery that may go out of
fashion in time. Instead, buy
gold bars and coins from
banks or jewellers. This is
hallmark gold. So, you can
be assured that you are
getting pure gold and will
not lose out on making
charges when you go out to
sell them for jewellery.

3. If investment in gold as an asset class is on your mind, this form of paper gold is
perhaps the best way of investment as financial planners unanimously concede.
All you need is a demat account and you can start with your investment.

4. You need a demat account
to transact online in this
fund and you also get to
take physical delivery of
gold albeit on some
conditions. Your regular
demat account will not
work as you will need to
have an account with one
of the empanelled
depository participants. E-
gold was a platform
launched by the National
Spot Exchange (NSEL),
which also offers a similar
investment option on silver
and platinum as well.

5. Hedging through gold futures is not
much of an investment but is used by
those who trade in gold. What these
futures essentially do is they protect
you against a future price hike. For
instance, if the price of one unit of
gold is Rs 31,000/10 gm now and a
future with a tenure of three months
is available at a price of Rs 31,500/10
gm, you can lock yourself at this price
and protect yourself against price
fluctuations in the short term.

6. Composition of Gold Holdings (as at end-December 2010)
Composition of gold holdings( as at March 2012)

7. Real and Nominal price of international gold

8. International and Domestic price of spot gold – increasing
pattern observed

9. Review of Gold in 2012 in terms of US dollars
The gold price started into the year 2012 at US dollars 1,531 per ounce.
Over the full year 2011 the price of gold had increased by nearly 9% despite
the two dips in September and November/ December. This made 2011 the
tenth consecutive year in which the gold price increased.
By December 31st, 2012 the gold price has further increased – amid high
volatility – to roughly US dollars 1,657, i.e. by more than 8% from the
beginning of 2012. In euro terms the price increase was nearly 6% over the
same period.

10. Uses of gold in
today’s world
other than
investment for
profit returns.

11. The World Gold
Council is a non-profit
association of the
world's leading gold
mining companies,
established in 1987 to
promote the use of
gold. It aims to
stimulate demand for
gold from industry,
consumers, and
investors

12. The Reserve Bank of India (RBI) in September,2012 directed all non-banking
finance companies (NBFCs) not to sanction loan beyond 60 per cent of the value
of gold jewellery.
Incidentally the directive follows government proposing a hike in import duty on
the precious metal and imposition of excise duty on unbranded-jewellery.
RBI makes an
attempt to
minimize
demand for
gold loan and
hence, a
demand for
gold in the
process.

13. The Economic Advisory Council made the
recommendation in its review of the economy that the
government discourage gold purchases and instead
provide incentives for investment in financial assets
because gold accentuates the current account deficit
and hence, import of the yellow metal is unsustainable.
Rising prices of the precious metal, over 60% in dollar
terms in the last couple of years, has bloated the
country's import bill causing uneasiness among policy
makers. The current account deficit is expected to be
around $160 billion in the current year, with gold
imports closer to $50 billion.

14. http://www.unitedworld.edu.in/
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